The BSE Sensex settled 67.28 points, or 0.20 per cent, down at 32,802.44, while NSE Nifty index closed 9.50 points, or 0.09 per cent, down at 10,118.25. This is also the benchmark's highest closing since November 30, when it had finished at 33,149.35.
Vinod Nair, Head of Research, Geojit Financial Services, said: "Market smartly recouped from the yesterday's losses which were triggered by Reserve Bank of India's (RBI) hawkish policy and weakness in global market".
The 30-scrip Sensitive Index (Sensex) on Wednesday opened on a negative note during the morning session of the trade.
European markets were modestly higher in early trade as investors digested merger and acquisition news and awaited further details on progress towards US tax reform. Most Asian shares declined as U.S. policy uncertainty kept sentiment in check. Positive opening in European shares boosted investors' sentiment in the domestic market.
Bharti Airtel secured podium finish among the Sensex constituents, ratcheting up 6.08 per cent.
In the broader markets, the S&P BSE mid-cap index closed higher by 1.38 per cent and the small-cap index by 1.29 per cent.
Out of 1,989 stocks traded on the NSE, 1,219 advanced, 474 declined and 296 remained unchanged today.
In the eurozone, key indices such as Paris CAC 40 and Frankfurt's DAX were up by 0.32 per cent and 0.55 per cent in their early deals.